(May 28, 2004)

The State of Israel is committed to the peace process
and endeavors to reach an agreed arrangement based on the vision presented
by U.S. President George W. Bush.

The State of Israel believes it must take action to
improve the current situation. The State of Israel has reached the conclusion
that there is currently no partner on the Palestinian side with whom
progress can be made on a bilateral process. Given this, a four-stage
disengagement plan has been drawn up, based on the following considerations:

A. The stalemate embodied in the current situation
is damaging; in order to break the stalemate, the State of Israel must
initiate a process that is not dependent on cooperation with the Palestinians.

B. The aim of the plan is to bring about a better security,
diplomatic economic and demographic reality.

C. In any future permanent arrangement, there will
be no Israeli presence in the Gaza Strip. On the other hand, it is clear
that some parts of Judea and Samaria (including key concentrations of
Jewish settlements, civilian communities, security zones and areas in
which Israel has a vested interest) will remain part of the State of
Israel.

D. The State of Israel supports the efforts of the
United States, which is working along with the international community,
to promote the process of reform, the establishment of institutions
and improving the economic and welfare conditions of the Palestinian
people, so that a new Palestinian leadership can arise, capable of proving
it can fulfill its obligations under the road map.

E. The withdrawal from the Gaza Strip and from the
northern part of Samaria will reduce interaction with the Palestinian
population.

F. Completion of the four-stage disengagement plan
will negate any claims on Israel regarding its responsibility for the
Palestinian population of the Gaza Strip.

G. The process of graduated disengagement does not
detract from existing agreements between Israel and the Palestinians.
The relevant security arrangements will remain in force.

H. International support for the four-stage disengagement
plan is widespread and important. This support is vital in ensuring
that the Palestinians fulfill their obligations in terms of fighting
terror and implementing reforms, in accordance with the road map. Only
then will the sides be able to resume negotiations.

II. Key points of the plan

A. The Gaza Strip

1. The State of Israel will withdraw from the Gaza
Strip, including all Israeli settlements, and will redeploy outside
the area of the Strip. The method of the withdrawal, with the exception
of a military presence in the area adjacent to the border between
Gaza and Egypt (the Philadelphi route), will be detailed below.

2. Once the move has been completed, there will be
no permanent Israeli military presence in the evacuated territorial
area of the Gaza Strip.

3. As a result of this, there will be no basis to
the claim that the Strip is occupied land.

B. Judea and Samaria

1. The State of Israel will withdraw from northern
Samaria (four settlements: Ganim, Kadim, Sa-Nur and Homesh) as well
as all permanent military installations in the area, and will redeploy
outside the evacuated area.

2. Once the move has been completed, there will be
no permanent Israeli military presence in the area.

3. The move will provide Palestinian territorial
contiguity in the northern parts of Samaria.

4. The State of Israel, along with the international
community, will help improve the transportation infrastructure in
Judea and Samaria, with the goal of providing continuous transport
for Palestinians in Judea and Samaria.

5. The move will make it easier for Palestinians
to live a normal life in Judea and Samaria, and will facilitate economic
and commercial activity.

C. The Process

The withdrawal process is slated to end by the end
of 2005.

The settlements will be split into the following four
groups:

1. Group A - Morag, Netzarim, Kfar Darom

2. Group B - The four settlements in northern Samaria
(Ganim, Kadim, Sa-Nur and Homesh).

3. Group C - The Gush Katif bloc of settlements.

4. Group D - The settlements in the northern Gaza Strip
(Alei Sinai, Dugit and Nissanit)

The necessary preparations will be undertaken in order
to implement the four-stage disengagement plan (including administrative
work to set relevant criteria, definitions and preparation of the necessary
legislation.)

The government will discuss and decide separately on
the evacuation of each of the above-mentioned groups.

D. The security fence

The State of Israel will continue to construct the
security fence, in accordance with the relevant cabinet decisions. In
deciding on the route of the fence, humanitarian considerations will
be taken into account.

III. The security reality after the evacuation

A. The Gaza Strip

1. The State of Israel will monitor and supervise
the outer envelope on land, will have exclusive control of the Gaza
airspace, and will continue its military activity along the Gaza Strip's
coastline.

2. The Gaza Strip will be completely demilitarized
of arms banned by current agreements between the sides.

3. The State of Israel reserves the basic right to
self defense, which includes taking preventive measures as well as
the use of force against threats originating in the Gaza Strip.

B. The West Bank

1. After the evacuation of the northern Samaria settlements,
there will be no permanent military presence in that area.

2. The State of Israel reserves the basic right to
self defense, which includes taking preventive measures as well as
the use of force against threats originating in the area.

3. Military activity will remain in its current framework
in the rest of the West Bank. The State of Israel will, if circumstances
allow, consider reducing its activity in Palestinian cities.

4. The State of Israel will work to reduce the number
of checkpoints throughout the West Bank.

IV. Military infrastructure and installations in
the Gaza Strip and the northern Samaria region

All will be dismantled and evacuated, except for those
that the State of Israel decides to transfer to an authorized body.

V. The nature of the security assistance to the
Palestinians

The State of Israel agrees that in coordination with
it, consulting, assistance and training will be provided to Palestinian
security forces for the purpose of fighting terror and maintaining the
public order. The assistance will be provided by American, British,
Egyptian, Jordanian or other experts, as will be agreed upon with Israel.

The State of Israel stresses that it will not agree
to any foreign security presence in Gaza or the West Bank without its
consent.

VI. The border area between the Strip and Egypt
(the Philadelphi route)

The State of Israel will continue to maintain military
presence along the border between the Gaza Strip and Egypt (the Philadelphi
route.) This presence is an essential security requirement. The physical
widening of the route where the military activity will take place, may
be necessary in certain areas.

The possibility of evacuating the area will be considered
later on. This evacuation would be conditioned, among other factors,
on the security reality and on the level of cooperation by Egypt in
creating an alternative credible arrangement.

If and when the conditions are met enabling the evacuation
of the area, the State of Israel will be willing to consider the possibility
of setting up an airport and a seaport in the Gaza Strip, subject to
arrangements agreed upon with the State of Israel.

VII. Real estate

In general, houses belonging to the settlers, and other
sensitive structures such as synagogues will not be left behind. The
State of Israel will aspire to transfer other structures, such as industrial
and agricultural facilities, to an international third party that will
use them for the benefit of the Palestinian population.

The Erez industrial zone will be transferred to an
agreed-upon Palestinian or international body.

The State of Israel along with Egypt will examine the
possibility of setting up a joint industrial zone on the border between
Israel, Egypt and the Gaza Strip.

VIII. Infrastructure and civilian arrangements

The water, electricity, sewage and communications infrastructures
will be left in place.

As a rule, Israel will enable the continued supply
of electricity, water, gas and fuel to the Palestinians, under the existing
arrangements and full compensation.

The existing arrangements, including the arrangements
with regard to water and the electromagnetic area, will remain valid.

IX. The activity of the international civilian organizations

The State of Israel views very favorably continued
activity of the international humanitarian organizations and those that
deal will civil development, which aid the Palestinian population.

The State of Israel will coordinate with the international
organizations the arrangements that will make this activity easier.

The State of Israel suggests that an international
mechanism (such as the AHLC) be set up, in coordination with Israel
and international bodies, that will work to develop the Palestinian
economy.

X. Economic arrangements

In general, the economic arrangements that are currently
in effect between Israel and the Palestinians will remain valid. These
arrangements include, among other things:

A. The movement of goods between the Gaza Strip, Judea
and Samaria, Israel and foreign countries.

B. The monetary regime.

C. The taxation arrangements and the customs envelope.

D. Postal and communications arrangements.

H. The entry of workers into Israel in accordance with
the existing criteria.

In the long run, and in accordance with the Israeli
interest in encouraging Palestinian economic independence, The State
of Israel aspires to reduce the number of Palestinian workers entering
Israel, and eventually to completely stop their entrance. The State
of Israel will support the development of employment sources in the
Gaza Strip and in the Palestinian areas in the West Bank, by international
bodies.

XI. The international crossing points

A. The international crossing point between the Gaza
Strip and Egypt

1. The existing arrangements will remain in force.

2. Israel is interested in transferring the crossing
point to the "border triangle," south of its current location.
This will be done in coordination with the Egyptian government. This
will allow the expansion of the hours of activity at the crossing
point.

B. The international crossing points between Judea
and Samaria, and Jordan.

The existing arrangements will remain in force.

XII. The Erez crossing point

The Erez crossing point will be moved into the territory
of the State of Israel according to a timetable that will be determined
separately.

XIII. Summary

The implementation of the four-stage disengagement
plan will bring about an improvement in the situation and a break from
the current stagnation. If and when the Palestinian side shows a willingness,
an ability and an implementation of actions to fight terrorism, a full
cessation of terror and violence and the carrying out of reforms according
to the roadmap, it will be possible to return to the track of discussions
and negotiations.